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What Policies and Procedures Should a Congregation Develop?

Every congregation has financial policies and procedures, both written and unwritten.  Policies clarify expectations and increase compliance among volunteers and staff.  Procedures provide reminders and assist in training.  How can you evalulate and document your financial system?  Which policies (approved by Council or congregation) and procedures (documented) should you have to protect the financial health of your congregation?  Which should you include in your Constitution or Bylaws?

A looseleaf notebook provides a good format, with each policy or procedure dated as it is updated and replaced.  Policies and Procedures can also be posted online in a way that is available only to your staff or members (intranet).  The first step is to collect what you already have and organize it.  The second is to outline a plan to fill in the missing pieces, over several years if needed.  Note that some policies and procedures are legal requirements that vary from state to state, some may be required by an external auditor, while others are best practices.

Here is a listing of possible policies and procedures:  (A Church Finance Handbook is posted on the Resources tab and sample policies are available for paid subscribers)

  • Cash Receipts Procedure: Who does What by When?
    • Cash Handling & Counting procedure
    • Confidentiality policy
  • Cash Disbursement Procedure: Who does What by When?
    • Approval, Check Signing, Review (CFH p. 190)
    • Accountable Reimbusement Plan (CFH p. 189)
    • Debit or Credit Card Policy (CFH p. 184)
    • Tax Compliance Procedures (Withholding, Property, Sales, Raffle, Local)
  • Personnel
    • New Hire procedures and checklist (CFH pp. 188)
    • Employee vs Contractor determination (CFH pp. 185-87)
    • Compensation Policy (Equal Pay Act compliance)
    • Payroll procedures: Timesheets, Tax Withholding Compliance, Review (CFH p. 42)
    • Benefits: Health, Pension, Life/Disability
    • Paid Time Off: Sick Time & Vacation (CFH p. 155)
    • CORI & SORI Policy
    • Poster Requirements: bulletin board or intranet
    • Employee Handbook
  • Financial Reporting
    • Monthly reports
    • Quarterly reports: Available to Congregation
    • Annual reports: Available
  • Budget Development Procedure
    • Input, Timing, Congregational approval (CFH pp. 37-40)
    • Budget Monitoring (CFH pp. 41-42)
    • Capital Budget (CFH pp. 43-45)
  • Gift Acceptance & Investment Policy
    • Memorial Fund Policy
    • Investment Policy (CFH pp. 47-48)
    • Endowment Policy & UPMIFA Procedures (CFH pp.73-76)
  • Document Security & Retention
    • Privacy for individual bank account and/or personal information (CFH p. 200-01)
    • Backup Procedures for financial software files and valuable paper records
    • Password Listing
    • Records Retention Policy (CFH pp. 80-82)

Please comment if you have idea or a sample policy to share!